Lack of Marketing Hits Michael Hill

RAPAPORT… Michael Hill’s sales fell 9% in the first fiscal quarter as
the retailer underestimated how much marketing it needed for its strategic
shift away from discounting, the company said.



Group revenue fell to AUD 112.1 million ($79.7 million), the jeweler reported Friday. While the Australia-based retailer
believes the new approach will strengthen brand loyalty and raise the value of
its products, the move lacked the adequate marketing to support it,
it added. Same-store sales — those at branches open for at least a year — slid 11%
in the three months ending September 30.


“During the quarter and in line with our strategy, the group
increased gross profit margin as it reduced its reliance on discount-based
events,” said Michael Hill CEO Phil Taylor. “However, on review, this shift was not
adequately supported by sufficient levels of marketing and promotional
activities to drive top-line sales.”


Despite the challenging transition, the company will
continue with its plan to reposition Michael Hill as an omni-channel brand that
stands out from others, Taylor added.


Same-store sales in Australia, the jeweler’s largest market,
fell 13% to AUD 62.5 million ($44.5 million). During the period, one store
opened, and three closed, for a total of 169 locations at the end of the
quarter.


Sales in New Zealand slipped 8% to NZD 23.4 million ($15.2
million), with a single store launch bringing the total in the country to 53.
Sales in Canadian shops plunged 11% to CAD 21.8 million ($16.7 million), with a
total of 84 stores trading at the end of September.


The group shut four Emma & Roe locations during the
period, in line with its closure plan for the brand. Two shops continue to
operate, as does the Emma & Roe website. Heavy discounting at the remaining
outlets drove quarterly sales up to AUD 2.4 million ($1.7 million) from AUD 1.1
million ($794,210) last year.


Last month, Michael Hill announced that Phil Taylor would be
stepping down as CEO. Daniel Bracken will take on the role on November 15.

Image: Michael Hill store, Newmarket, Ontario, Canada. (LGA)